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CAPITALAND RETAIL CHINA TRUST
(Constituted in the Republic of Singapore pursuant to
a trust deed dated 23 October 2006 (as amended))
ANNOUNCEMENT
PROPOSED ACQUISITION OF THE COMPANIES WHICH HOLD CAPITAMALL XUEFU,
CAPITAMALL AIDEMENGDUN AND CAPITAMALL YUHUATING FROM INTERESTED
PERSONS
1. INTRODUCTION
1.1 Acquisition
CapitaLand Retail China Trust Management Limited, as manager of CapitaLand Retail
China Trust (“CRCT”, and the manager of CRCT, the “Manager”), is pleased to announce
that CRCT, through its wholly-owned subsidiaries, CRCT China Investment (Harbin I) Pte.
Ltd., CRCT China Investment (Harbin II) Pte. Ltd. and CRCT China Investment (Changsha)
Pte. Ltd. (collectively, the “Purchasers”) had today entered into a conditional agreement
(the “Agreement”) with Ever Outstand Limited, CapitaRetail China Developments D5 (HK)
Limited, Upper Great Limited and CapitaRetail China Investments Pte. Ltd. (“CRCI”)
(collectively, the “Vendors”) to acquire:
(i) 100.0% of the shares of CapitaRetail Harbin Shangdu Real Estate Co., Ltd. which
holds CapitaMall Xuefu located at No.1 Xuefu Road, Harbin, China (“CapitaMall
Xuefu”);
(ii) 100.0% of the shares of Beijing Hualian Harbin Real Estate Development Co., Ltd.
which holds CapitaMall Aidemengdun located at No. 38 Aidemengdun Road,
Harbin, China (“CapitaMall Aidemengdun”); and
(iii) 100.0% of the shares of CapitaMalls Hunan Commercial Property Co., Ltd. which
holds CapitaMall Yuhuating located at No. 421 Shaoshan Middle Road,
Changsha, China (“CapitaMall Yuhuating”, together with CapitaMall Xuefu and
CapitaMall Aidemengdun, the “Properties”),
(each of CapitaRetail Harbin Shangdu Real Estate Co., Ltd., Beijing Hualian Harbin Real
Estate Development Co., Ltd., and CapitaMalls Hunan Commercial Property Co., Ltd., a
“Target Company” and collectively, the “Target Companies”; the acquisition by the
Purchasers of 100.0% of the shares in the Target Companies (the “Shares”) from the
Vendors shall be referred to as the “Acquisition”).
1.2 Relationship with the Vendors
As at the date of this announcement, CapitaLand Limited (“CapitaLand”) through (i) its
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indirect wholly owned subsidiaries namely, Retail Crown Pte. Ltd. and the Manager and (ii)
CapitaLand Mall Trust has a deemed interest in 379,901,879 units in CRCT (“Units”), which
comprises approximately 38.04% of the total number of Units in issue, and is therefore
regarded as a “controlling unitholder” of CRCT under both the Listing Manual of the
Singapore Exchange Securities Trading Limited (the “SGX-ST” and the Listing Manual of
the SGX-ST, the “Listing Manual”) and Appendix 6 of the Code on Collective Investment
Schemes (the “Property Funds Appendix”). In addition, as the Manager is a wholly owned
subsidiary of CapitaLand, CapitaLand is therefore regarded as a “controlling shareholder”
of the Manager under both the Listing Manual and the Property Funds Appendix.
CRCI is a wholly owned subsidiary of CapitaLand, while the remaining Vendors are
associated companies of CapitaLand in which CapitaLand has an interest of 45%.
For the purposes of Chapter 9 of the Listing Manual and Paragraph 5 of the Property Funds
Appendix, the Vendors (being associates of a “controlling unitholder” of CRCT and a
“controlling shareholder” of the Manager) are (for the purpose of the Listing Manual)
“interested persons” and (for the purpose of the Property Funds Appendix) “interested
parties” of CRCT.
Therefore, the Acquisition will constitute an “interested person transaction” under Chapter 9
of the Listing Manual as well as an “interested party transaction” under the Property Funds
Appendix, in respect of which the approval of unitholders of CRCT (“Unitholders”) is
required.
A circular is expected to be issued to Unitholders in due course (the “Unitholders’
Circular”), together with a notice of extraordinary general meeting, for the purpose of
seeking the approval of Unitholders for the Acquisition.
2. Information on the Properties
2.1 CapitaMall Xuefu
CapitaMall Xuefu, which commenced operations in 2012, is a multi-tenanted mall with a
gross rentable area of 104,294 sq m comprising five above ground levels and one basement
level of retail space and one basement level for car park use. It is located in the Nangang
District of Harbin, the capital and largest city of the Heilongjiang Province, and strategically
situated at the intersection of multiple arterial roads serving the city. The mall is well-served
by public transportation and enjoys direct connectivity to Xuefu Road Station on Line 1 of
the Harbin Metro. It houses a diverse mix of international and domestic brands such as BHG
Supermarket, CGV Cinema, H&M, Haidilao, Sisyphe Books and Hotwind.
2.2 CapitaMall Aidemengdun
CapitaMall Aidemengdun, which commenced operations in 2010, is a multi-tenanted mall
with a gross rentable area of 43,394 sq m comprising four above ground levels of retail
space and one basement level for retail and car park use. It is located in the Daoli District
of Harbin, the capital and largest city of the Heilongjiang Province. The Daoli District is part
of the city’s urban core district and is close to Central Street, the main pedestrian street
popular for shopping and dining, and other key tourist attractions where the Harbin
International Ice & Snow Festival is held. The mall is in close proximity to the Second Ring
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Road, and enjoys direct frontage to Aidemengdun Road that connects the Harbin Taiping
International Airport to Central Street in the city centre. The mall can be easily accessed via
public transportation and is within 1.5 kilometres from two metro stations on Line 1 of the
Harbin Metro. The mall features a wide tenant base consisting of popular tenants such as
Qi Cai International Cineplex, KFC, Pizza Hut, Nike, Adidas and Watsons.
2.3 CapitaMall Yuhuating
CapitaMall Yuhuating, which commenced operations in 2005, is a multi-tenanted mall with
a gross rentable area of 62,080 sq m comprising four above ground levels of retail space
and one basement level for retail and car park use. It is located in Changsha, the capital of
the Hunan Province and a key logistics hub in China. As an established mall within the
Dongtang Retail Area of Yuhua District, it is conveniently accessible via numerous bus
routes and the Tujiachong and Shazitang metro stations that are approximately 1 kilometre
away. As a one-stop shopping destination surrounded by large residential communities,
CapitaMall Yuhuating offers a broad spectrum of tenants such as Walmart, Haidilao, Li-
Ning, Starbucks, Uniqlo and KFC.
The table below sets out some details of the Properties as at 31 March 2019 (unless
otherwise indicated).
CapitaMall
Xuefu
CapitaMall
Aidemengdun
CapitaMall
Yuhuating
Location No.1 Xuefu Road,
Harbin
No. 38 Aidemengdun
Road, Harbin
No. 421 Shaoshan
Middle Road, Changsha
Year of Opening 2012 2010 2005
Land Use Right
Expiry
2045 2042 2044
Gross Rentable
Area (“GRA”)
104,294 sq m 43,394 sq m 62,080 sq m
Committed
Occupancy
99.8% 98.6% 98.1%
No. of Leases 419 189 221
Agreed Value RMB1,745.0 million RMB469.0 million RMB746.0 million
Agreed Value
per sq m GRA
RMB16,732 RMB10,808 RMB12,017
NPI Yield on
Agreed Value(1)
6.1% 5.6% 6.2%
Note:
(1) Based on FY 2018 NPI.
3. PRINCIPAL TERMS OF THE ACQUISITION
3.1 Total Acquisition Cost
The total cost of the Acquisition (the “Total Acquisition Cost”) is approximately S$505.4
million, comprising:
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(i) the consideration payable to the Vendors in connection with the Acquisition as
described in paragraph 3.2 (the “Consideration”) and the Yuhuating Shareholder
Loan as described in paragraph 3.2, in the aggregate amount of approximately
S$489.0 million;
(ii) an acquisition fee (the “Acquisition Fee”) payable in Units to the Manager pursuant
to the trust deed dated 23 October 2006 constituting CRCT (as amended) for the
Acquisition (the “Acquisition Fee Units”) of approximately S$5.9 million1; and
(iii) the estimated professional and other fees and expenses incurred or to be incurred
by CRCT in connection with the Acquisition (inclusive of the equity financing-related
expenses and debt financing-related expenses) of approximately S$10.5 million.
3.2 Consideration and Valuation
The estimated Consideration takes into account the assumed adjusted net asset value
(“NAV”) of RMB2,432.0 million (approximately S$484.1 million2,3) computed based on the
audited accounts as of 31 December 2018 of each of the Target Companies, taking into
account, among other things, the agreed market value (the “Agreed Value”) of CapitaMall
Xuefu, CapitaMall Aidemengdun and CapitaMall Yuhuating of RMB1,745.0 million (S$347.3
million), RMB469.0 million (S$93.4 million) and RMB746.0 million (S$148.5 million)
respectively. The Agreed Value was negotiated on a willing-buyer and willing-seller basis
and takes into account the independent valuations of the Properties.
In addition, CRCI will transfer the outstanding principal of the shareholder loan in respect of
CapitaMall Yuhuating and accrued interest thereon (the “Yuhuating Shareholder Loan”)
up to the date of transfer of the Yuhuating Shareholder Loan to CRCT. As of 31 December
2018, the total principal and accrued interest of the Yuhuating Shareholder Loan is US$3.6
million (approximately S$4.9 million4).
The final Consideration payable to the Vendors will be subject to completion adjustments.
The Manager has commissioned an independent property valuer, Cushman & Wakefield
International Property Advisers (Shanghai) Co., Ltd (“C&W”), and the Trustee has
commissioned another independent property valuer, Jones Lang LaSalle Property
Consultants Pte Ltd (“JLL”, and together with C&W, the “Independent Valuers”), to value
the Properties. The valuations of the Properties as at 31 March 2019 are set out below.
1 As the Acquisition will constitute an “interested party transaction” under the Property Funds Appendix issued by the
Monetary Authority of Singapore, the Acquisition Fee shall be in the form of Acquisition Fee Units and shall not be sold
within one year from the date of issuance in accordance with Paragraph 5.7 of the Property Funds Appendix.
2 Except where the exchange rate between the Chinese RMB and the Singapore dollar is expressly stated otherwise,
certain Chinese RMB amounts in this announcement have been translated into Singapore dollars based on the fixed
exchange rate of RMB5.024 = S$1.000 pursuant to the Agreement.
3 Comprises the assumed adjusted NAV of RMB1,431.9 million (approximately S$285.0 million), RMB354.1 million
(approximately S$70.5 million) and RMB646.0 million (approximately S$128.6 million) for CapitaMall Xuefu, CapitaMall
Aidemengdun and CapitaMall Yuhuating, respectively which take into account existing asset-level indebtedness.
4 The exchange rate for the Yuhuating Shareholder Loan has been fixed at S$1.373 = US$1.000 pursuant to the
Agreement.
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C&W JLL Agreed Value
RMB’ million RMB’ million RMB’ million S$’ million
CapitaMall Xuefu 1,760.0 1,748.0 1,745.0 347.3
CapitaMall Aidemengdun 480.0 470.0 469.0 93.4
CapitaMall Yuhuating 760.0 749.0 746.0 148.5
Total 3,000.0 2,967.0 2,960.0 589.2
The methods used by the Independent Valuers were the capitalisation method and the
discounted cash flow method.
3.3 Certain Terms and Conditions of the Agreement
The entry into the equity transfer agreements in relation to the transfer of Shares (“Equity
Transfer Agreements”) to the Purchasers (in the form as set out in the Agreement) and
completion of the Acquisition (the “Completion”) will be subject to the satisfaction of a
number of conditions, including:
3.3.1 the Vendors having procured full repayment of all outstanding entrustment loans
owing to the Target Companies;
3.3.2 the Purchasers having obtained the approval of the Unitholders for the Acquisition;
3.3.3 CRCT having secured funds to its account to undertake the Acquisition;
3.3.4 there having occurred no material adverse change; and
3.3.5 there having been no breach of any of the fundamental warranties contained in the
Agreement as at the entry into of the Equity Transfer Agreements and Completion
(as if repeated at the entry into of the Equity Transfer Agreements and Completion).
Following the entry into the relevant Equity Transfer Agreements, the necessary filings with
the Administration for Industry and Commerce of the People’s Republic of China (“PRC”)
shall be undertaken.
Completion is expected to take place by end of 3Q 2019. The completion of the acquisition
of each Property may take place on different dates. Accordingly, it is possible that CRCT
may complete the acquisition of one or more of the Properties but not complete the
acquisition of the other Properties if the conditions (as described in this paragraph 3.3) are
not satisfied.
3.4 Property Management Agreements
Under the terms of the property management agreements to be entered into between the
respective Target Companies and CapitaLand Retail (Shanghai) Management & Consulting
Co., Ltd. and its branches (the “Property Manager”, and the property management
agreement, the “Property Management Agreements”), the Property Manager will provide
property management services for the Properties. The Property Manager is a wholly-owned
subsidiary of CapitaLand, and the entry into the Property Management Agreements would
be considered as an interested person transaction.
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The fees payable pursuant to the Property Management Agreements will be as follows:
(i) 2.0% per annum of the gross revenue of each of the Property; and
(ii) 2.5% per annum of the net property income (“NPI”) of each of the Property.
Under the Property Management Agreements, the Property Manager will be fully reimbursed
for (i) the employment costs and remuneration relating to any personnel engaged solely for
the provision of services for the Property, and (ii) for the allocated employment costs and
remuneration relating to the centralised team of personnel engaged exclusively to provide
group services for the Property, as approved in each annual budget by the project company.
The term of each of the Property Management Agreement is from the day subsequent to
the actual completion date of the Acquisition to 30 June 2021. Further details will be set out
in the Unitholders’ Circular to be despatched to Unitholders in due course.
4. RATIONALE FOR AND BENEFITS OF THE ACQUISITION
The Manager believes that the Acquisition will bring the following key benefits to Unitholders:
4.1 Addition of Strategically Located and High Quality Assets
4.1.1 Entry into growing cities supported by strong economic fundamentals
The Properties are located in two provincial capital cities with strong economic
fundamentals and long-term growth potential. The Properties are situated in
populous residential districts, and retail and commercial hubs. They are also
strategically located within close proximity to key attractions and have access to key
transportation networks. CapitaMall Xuefu and CapitaMall Aidemengdun are
located in Harbin, the capital city of Heilongjiang Province in North China.
CapitaMall Yuhuating is located in Changsha, the capital city of Hunan Province in
Central China. This Acquisition allows CRCT to gain exposure to two rising
provincial capital cities which CRCT currently does not have a presence in.
4.1.2 Strategic locations with excellent connectivity
The Properties are situated in well-established hubs with attractive micro-location
characteristics. They enjoy excellent connectivity by being in close proximity to
transportation hubs and are easily accessible via various transportation modes.
Property City Connectivity
CapitaMall
Xuefu Harbin
Directly connected to Xuefu Road Station on Metro
Line 1
Well-served by more than nine bus lines
Enjoys direct frontage to Xuefu Road which
connects directly to the Second Ring Road
CapitaMall
Aidemengdun Harbin
Approximately 1.5 kilometres from Xuefu Road
Station and Hexing Road Station on Metro Line 1
Well-served by more than eight bus lines
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Property City Connectivity
Close proximity to the Second Ring Road and
enjoys direct frontage to Aidemengdun Road that
connects the Harbin Taiping International Airport to
Central Street in the city centre
CapitaMall
Yuhuating Changsha
Approximately 1 kilometre from Tujiachong Station
on Metro Line 1 and Shazitang Station on Metro
Line 4
Easily accessible by more than 15 bus lines
Enjoys premium frontage at the major intersection
of Xinjian East Road and Shaoshan Middle Road,
which is one of the city’s main arterial roads
connecting directly to the Second Ring Road
4.1.3 Well-established quality assets with strong population catchment
CapitaMall Xuefu
CapitaMall Xuefu, which commenced operations in 2012, is positioned as a modern
and experiential regional shopping mall mainly targeting the students and staff from
the nearby cluster of eight universities as well as residents from the surrounding
high-density, affluent and mature residential communities and financial facilities.
CapitaMall Xuefu is strategically located next to a cluster of tertiary education
institutions where the student population form a large proportion of the sizeable
catchment of approximately 750,000 within a 3-kilometre radius.
CapitaMall Aidemengdun
CapitaMall Aidemengdun, which commenced operations in 2010, is located in
Downtown Harbin and positioned as a community mall to mainly serve the needs of
residents from the neighbouring high-density residential communities and students
and staff from nearby tertiary education institutions. It has an established population
catchment of approximately 400,000 within a 3-kilometre radius. As one of the
earliest community malls in the area, it has a captive consumer base formed by the
surrounding residents, with strong focus on young families with children, sports and
education offerings.
CapitaMall Yuhuating
CapitaMall Yuhuating, which commenced operations in 2005, is positioned as a
community mall located within a core retail hub where there is a high concentration
of populated residential communities and office buildings, providing the mall with a
dense catchment of approximately 700,000 within a 3-kilometre radius. The mall is
the only one stop necessity shopping mall in the locality, and offers a
comprehensive and integrated shopping experience with a diverse offering
including supermarket, cinema, fashion, food and beverage (“F&B”) and leisure.
Having operated in the local market for over 10 years and with no direct competitors
in the area within a 3-kilometre radius, CapitaMall Yuhuating has firmly established
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itself within its main trade area and has built strong brand awareness among the
locals.
4.1.4 Acquisition of customer centric malls targeting local demographics, and
offering “Experiential” customer shopping experiences
The Properties primarily cater to the daily and necessity shopping needs of the local
population within the surrounding catchment. The Properties are anchored by
established brand retailers such as Walmart and Beijing Hualian Group, as well as
a wide range of specialty tenants.
CapitaMall Aidemengdun and CapitaMall Yuhuating are positioned as community
malls with a focus on a wide range of “needs-based” and affordable shopping
options such as fresh foods and groceries, making them daily destination stops for
the residents in the catchment communities. The malls also offer various F&B
options, including cafes and leisure facilities such as cinemas which provide a
regular following of weekend shoppers in addition to their weekday traffic.
In addition to providing the daily necessities for the catchment population, there are
also “experiential” aspects which help the malls to continuously attract footfall. For
example, CapitaMall Xuefu contains Dream Park, which is the first and only
Amazon-style indoor garden in Harbin providing all year-round summer experience
in a city which is famously known as the Ice City due to its long winters. The family
friendly zones and children play areas are regularly frequented by young families
seeking shopping, dining and “lifestyle” conveniences outside of their homes. The
themed artistic F&B street also incorporates aesthetically pleasing design elements
and is popular among the younger urban demography and was also the first of its
kind in Harbin. The new fashion concept stores also appeal to the young and
fashionable.
4.2 Significantly Increases CRCT’s Portfolio Size and NPI
Following the Acquisition, CRCT’s enlarged portfolio consisting of the Existing Portfolio and
CapitaMall Xuefu, CapitaMall Aidemengdun and CapitaMall Yuhuating (the “Enlarged
Portfolio”) will consist of 14 shopping malls, an increase from 11 shopping malls in the
Existing Portfolio. The Acquisition is expected to increase CRCT’s portfolio size by
approximately 18.6% from S$3.2 billion 5 as at 31 March 2019 to S$3.8 billion. The
Acquisition augments CRCT’s portfolio and enlarges the asset base, providing CRCT with
greater scale and a larger platform to grow.
CRCT’s NPI is also expected to increase by 22.8% from RMB781.2 million6 to RMB959.3
million7 on a pro forma basis for the financial year ended 31 December 2018 (“FY 2018”)
after the Acquisition.
5 Based on 100% interest in all of CRCT’s properties.
6 Based on CRCT’s audited financial statements for the period 1 January 2018 to 31 December 2018, including CRCT’s
51.0% interest in Rock Square’s NPI for the period from 1 February 2018 to 31 December 2018 which is accounted for
as part of “Share of results (net of tax) of joint venture”.
7 Includes FY 2018 NPI of the Properties, assuming CRCT had held and operated the Properties from 1 January 2018
to 31 December 2018.
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4.3 Further Enhances CRCT’s Portfolio Diversification
4.3.1 Increases geographical diversification across major China markets
CRCT currently owns 11 shopping malls located in eight cities, across five regions
in China with:
(a) CapitaMall Xizhimen, CapitaMall Wangjing, CapitaMall Grand Canyon,
CapitaMall Shuangjing and CapitaMall Saihan located in North China;
(b) CapitaMall Qibao and CapitaMall Wuhu located in East China;
(c) CapitaMall Xinnan in West China;
(d) Rock Square in South China; and
(e) CapitaMall Erqi and CapitaMall Minzhongleyuan in Central China,
(the “Existing Portfolio”).
The Acquisition will deepen CRCT’s presence in China and expand CRCT’s
portfolio into two new cities namely Harbin, the capital city of Heilongjiang Province
in North China and Changsha, the capital city of Hunan Province in Central China.
As a result, CRCT’s footprint in China will increase from eight cities to 10 cities and
CRCT’s presence in provincial capital cities will increase from seven cities to nine
cities8.
4.3.2 Increases exposure to multi-tenanted malls
Following the Acquisition, the contribution of gross revenue9 by multi-tenanted malls
in CRCT’s portfolio is expected to increase from 91.9% to 93.5% on a pro forma
basis, thus providing the Manager with greater opportunities to drive growth.
4.3.3 Increases diversification of revenue stream
The Acquisition is expected to improve revenue diversification and reduce the
reliance of CRCT’s gross revenue from any single property. Following the
Acquisition, the Manager expects that the maximum gross revenue contribution by
the top two properties within CRCT’s portfolio will decrease from 44.9% to 36.0%
on a pro forma basis.
Percentage Contribution
by Existing Portfolio to
CRCT Group’s Gross
Revenue(1)
Percentage Contribution
by Enlarged Portfolio to
CRCT Group’s Gross
Revenue(1)
CapitaMall Xizhimen 25.0% 20.1%
CapitaMall Wangjing 19.9% 15.9%
CapitaMall Xuefu - 11.1%
CapitaMall Xinnan 11.5% 9.2%
CapitaMall Grand Canyon 11.2% 9.0%
8 Includes municipalities and capital of autonomous regions.
9 Includes CRCT’s 51.0% interest in Rock Square.
10
Percentage Contribution
by Existing Portfolio to
CRCT Group’s Gross
Revenue(1)
Percentage Contribution
by Enlarged Portfolio to
CRCT Group’s Gross
Revenue(1)
CapitaMall Qibao 8.6% 6.9%
Rock Square(2) 7.2% 5.8%
CapitaMall Yuhuating - 5.3%
CapitaMall Saihan(3) 5.7% 4.5%
CapitaMall Aidemengdun - 3.5%
CapitaMall Erqi 4.3% 3.4%
CapitaMall Shuangjing 3.9% 3.1%
CapitaMall
Minzhongleyuan
2.0% 1.6%
CapitaMall Wuhu(3) 0.7% 0.6%
Total 100.0% 100.0%
Notes:
(1) Based on gross revenue for FY 2018.
(2) Based on CRCT’s 51.0% interest in Rock Square.
(3) CRCT had on 1 February 2019 announced the divestment of the equity interest which holds
CapitaMall Saihan which is expected to be completed in 2H 2020 and on 29 March 2019 announced
the divestment of the equity interest which holds CapitaMall Wuhu which is expected to be
completed in 2H 2019.
4.3.4 Reduces tenant concentration risk
Following the Acquisition, the number of leases in CRCT’s portfolio is expected to
increase by approximately 52%. As a result, the Acquisition will reduce tenant
concentration risk, and the aggregate exposure to the top 10 tenants of CRCT by
total rental income10 for the month of March 2019 on a pro forma basis will decrease
from 23.1% to 20.7%. In addition, the contribution to the total rental income for the
month of March 2019 by the largest tenant will be reduced from 8.3% to 7.5% on a
pro forma basis after the Acquisition.
4.3.5 Enhances trade mix
Following the Acquisition, CRCT’s trade mix would also become more diverse and
exposure to high growth trades such as Leisure & Entertainment, Fashion &
Accessories, F&B, Beauty & Healthcare, Sporting Goods & Apparel, Education and
Information & Technology will increase post Acquisition from 45.5% to 49.9% of the
total committed NLA.
10 Includes both gross rental income and gross turnover rental income components.
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4.4 Attractive Transaction Price That Delivers Accretion
The Manager believes that the Acquisition provides an attractive value proposition for
Unitholders given that it is expected to be an accretive Acquisition and done at a discount
to independent valuations.
The aggregate Agreed Value of the Properties implies an NPI yield of approximately 6.0%
which is higher than the Existing Portfolio NPI yield of approximately 5.7%.
Notes:
(1) Computed using FY 2018 NPI of the Existing Portfolio divided by its valuation as at 31 December 2018,
including CRCT’s 51.0% interest in Rock Square whose NPI yield is computed based on the annualised NPI
for the period 1 February 2018 to 31 December 2018.
(2) Computed using the aggregate FY 2018 NPI of the Properties divided by the aggregate Agreed Value of the
Properties. (3) Excludes CapitaMall Wuhu as the mall is fully closed.
The Properties’ aggregate Agreed Value of RMB2,960 million represents a discount of 1.3%
to C&W’s aggregate independent valuation of RMB3,000 million and a discount of 0.2% to
JLL’s aggregate independent valuation of RMB2,967 million.
4.5 Leverage on Strong Track Record of Management Team
The Properties are managed by CapitaLand who is one of the leading retail mall operators
5.7(1)
6.0(2)
Existing Portfolio The Properties
Net Property Income Yield (%)
(3)
~30 bps
12
in China. CapitaLand has an established track record in retail mall management in China
and has successfully built up a strong reputation known for its well-managed malls.
CapitaLand currently manages over 50 malls across more than 20 cities in China with an
extensive leasing network. Over the last three years, the Properties have demonstrated
healthy operating performances with committed occupancy consistently above 97% and
total tenant’s sales11 growing steadily with a compounded annual growth rate of 6.5%, 8.7%
and 6.3% for CapitaMall Xuefu, CapitaMall Aidemengdun and CapitaMall Yuhuating
respectively.
Notes: (1) Total tenants’ sales between 2016 and 2017 remained approximately flat due to ongoing asset enhancement
initiatives. Post completion of the asset enhancement initiatives, total tenants’ sales recorded an improvement
in 2018.
(2) Excludes tenants’ sales from supermarkets.
Upon Completion, the Properties will continue to be managed by the same cluster
management teams managing CapitaMall Xizhimen, CapitaMall Wangjing and CapitaMall
Grand Canyon in the North Region, and Rock Square in the Central/South Regions. The
cluster management teams have developed deep knowledge and established strong
relationships in the respective local markets over the years. They have a track record of
active asset management with demonstrable results.
CapitaMall Xuefu Active AEI initiatives by introducing innovative
experiential concepts strengthens market leadership
CapitaMall Aidemengdun Recent upgrading and brand refresh positions the
mall for further growth
CapitaMall Yuhuating Future plans to expand tenant mix, primarily in F&B
and Fashion & Accessories
This allows CRCT to tap on CapitaLand’s experience and local network, which provides a
smooth continuation of operations for the assets.
11 Excludes tenants’ sales from supermarkets.
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5. METHOD OF FINANCING
The Manager intends to finance the Acquisition with the proceeds from an equity fund raising
(the “Equity Fund Raising”) and debt financing including but not limited to issuances of
capital markets instruments under CRCT’s S$1.0 billion multicurrency debt issuance
programme.
The structure and timing of the Equity Fund Raising have not been determined by the
Manager as at the date of this announcement. The final decision regarding the proportion
of the debt and equity to be employed to fund the Acquisition will be made by the Manager
at the appropriate time with an objective to achieve accretion, taking into account the
prevailing market conditions, interest rate environment, while maintaining an optimum level
of aggregate leverage.
CapitaLand as the Sponsor and CapitaLand Mall Trust have indicated that they intend to
take up their pro-rata entitlement in an Equity Fund Raising, as relevant, subject to obtaining
the necessary corporate approvals and entry into of the relevant binding agreements.
Relevant information relating to the financial effects of the Acquisition, including its impact
on the NAV per Unit, the distribution per Unit and the CRCT’s aggregate leverage, will be
disclosed in the Circular.
6. AUDIT COMMITTEE STATEMENT
The Audit Committee of the Manager will obtain an opinion from Ernst & Young Corporate
Finance Pte Ltd (the “IFA”), which has been appointed as the independent financial adviser,
on the Acquisition before forming its own view.
The opinion of the IFA as to whether the Acquisition is on normal commercial terms and is
not prejudicial to the interests of CRCT and its minority Unitholders will be disclosed in the
Unitholders’ Circular.
7. OTHER INTERESTED PERSON TRANSACTIONS
As at the date of this announcement, there are no interested person transactions entered
into between (i) CRCT and (ii) entities within CapitaLand and its subsidiaries and associates,
during the course of the current financial year, which are the subject of aggregation pursuant
to Rule 906 of the Listing Manual.
8. INTERESTS OF DIRECTORS AND CONTROLLING UNITHOLDERS
As at the date of this announcement, certain directors of the Manager collectively hold an
aggregate direct and indirect interest in 476,209 Units and 979,413 shares in CapitaLand.
Mr Soh Kim Soon is the Chairman and a Non-Executive Independent Director of the
Manager. Mr Tan Tze Wooi is the Chief Executive Officer and an Executive Non-
Independent Director of the Manager. Mr Fong Heng Boo, Mr Christopher Gee Kok Aun,
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Professor Tan Kong Yam, Mr Neo Poh Kiat and Ms Kuan Li Li are Non-Executive
Independent Directors of the Manager. Mr Lee Chee Koon and Mr Lim Cho Pin Andrew
Geoffrey are Non-Executive Non-Independent Directors of the Manager.
As at the date of this announcement, CapitaLand through (i) its indirect wholly owned
subsidiaries namely, Retail Crown Pte. Ltd. and the Manager and (ii) CapitaLand Mall Trust
has a deemed interest in 379,901,879 Units, which comprises approximately 38.04% of the
total number of Units in issue.
Save as disclosed above and as at the date of this announcement, none of the directors of
the Manager or controlling Unitholders has an interest, direct or indirect, in the Acquisition.
9. OTHER INFORMATION
9.1 Directors’ Service Contracts
No person is proposed to be appointed as a director of the Manager in connection with the
Acquisition or any other transactions contemplated in relation to the Acquisition.
9.2 Disclosure under Rule 1006 of the Listing Manual
Chapter 10 of the Listing Manual classifies transactions by an issuer into (i) non-discloseable
transactions, (ii) discloseable transactions, (iii) major transactions and (iv) very substantial
acquisitions or reverse takeovers, depending on the size of the relative figures computed
on, inter alia, the following applicable bases of comparison set out in Rules 1006(b) and
1006(c) of the Listing Manual:
(i) the net profits attributable to the assets acquired, compared with the CRCT Group’s
net profits; and
(ii) the aggregate value of the consideration given, compared with the CRCT Group’s
market capitalisation.
Where any of the relative figures computed on the bases set out above exceeds 20.0%, the
transaction is classified as a major transaction. The Listing Manual requires that a major
transaction involving CRCT be made conditional upon approval by Unitholders in a general
meeting. However, the approval of Unitholders is not required in the case of an acquisition
of profitable assets if only sub-paragraph 9.2 (i) exceeds the relevant 20.0% threshold.
The relative figures for the Acquisition using the applicable bases of comparison as
described above are set out in the table below.
Comparison of Acquisition CRCT Group Relative figure (%)
Profits (S$ million) 7.7(1) 36.6(2) 21.0%
Consideration against market
capitalisation (S$ million)
489.0(3) 1,562.2(4) 31.3%
Notes:
(1) The figure is based on the unaudited management accounts of the Target Companies for the 3-month period
ended 31 March 2019.
(2) The figure is based on the unaudited results of the CRCT Group for the 3-month period ended 31 March 2019.
(3) Aggregate of the Consideration and the Yuhuating Shareholder Loan.
(4) The figure is based on the weighted average traded price of S$1.5645 per Unit on the SGX-ST as at 10 June
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2019, being the market day immediately preceding the date of the Agreement.
The Manager is of the view that the Acquisition is in the ordinary course of CRCT’s business
as the Acquisition is within the investment policy of CRCT and does not change the risk
profile of CRCT. As such, the Acquisition should therefore not be subject to Chapter 10 of
the Listing Manual. However, as the Acquisition constitutes an “interested person
transaction” under Chapter 9 of the Listing Manual and an “interested party transaction”
under the Property Funds Appendix which value crosses the relevant thresholds under the
Listing Manual and the Property Funds Appendix, the Acquisition will still be subject to the
specific approval of Unitholders.
9.3 Documents for Inspection
Copies of the following documents are available for inspection during normal business hours
at the registered office of the Manager12 located at 168 Robinson Road, #30-01 Capital
Tower, Singapore 068912 from the date of this announcement up to and including the date
falling three months after the date of this announcement:
(i) the Agreement;
(ii) the independent valuation reports on the Properties issued by C&W;
(iii) the independent valuation report on the Properties issued by JLL; and
(iv) the forms of the Property Management Agreements.
BY ORDER OF THE BOARD
CapitaLand Retail China Trust Management Limited
(Registration Number: 200611176D)
As manager of CapitaLand Retail China Trust
Chuo Cher Shing
Company Secretary
11 June 2019
Important Notice:
The value of units in CapitaLand Retail China Trust (“Units”) and the income derived from them may
fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, CapitaLand Retail
China Trust Management Limited (the “Manager”), as manager of CapitaLand Retail China Trust,
or any of its affiliates. An investment in Units is subject to investment risks, including the possible
loss of the principal amount invested.
Investors have no right to request the Manager to redeem their Units while the Units are listed. It is
intended that unitholders may only deal in their Units through trading on the Singapore Exchange
Securities Trading Limited (the “SGX-ST”). Listing of the Units on the SGX-ST does not guarantee
12 Prior appointment with the Manager is required. Please contact Ms Nicole Chen, Investor Relations (telephone: +65
6713 2888).
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a liquid market for the Units.
The past performance of CapitaLand Retail China Trust is not necessarily indicative of the future
performance of CapitaLand Retail China Trust.
This announcement may contain forward-looking statements that involve risks and uncertainties.
Actual future performance, outcomes and results may differ materially from those expressed in
forward-looking statements as a result of a number of risks, uncertainties and assumptions.
Representative examples of these factors include (without limitation) general industry and economic
conditions, interest rate trends, cost of capital and capital availability, competition from similar
developments, shifts in expected levels of property rental income, changes in operating expenses
(including employee wages, benefits and training costs), property expenses and governmental and
public policy changes. Investors are cautioned not to place undue reliance on these forward-looking
statements, which are based on the Manager’s view of future events.
